Against Individual Utilitarian Calculation

Rationalizing the irrational

For Group Calculation

From a utilitarian perspective, national governments ought to maximize the total welfare of all citizens past and present, and business entities ought to maximize shareholder value.

Assuming the government takes the max-sum rule, a state where utility is maximized implies one where there are no Pareto improvements, i.e. one that is Pareto optimal; to achieve this state, a government may apply the use of neoclassical economic theory and empirical analysis. They may also observe the Pigou-Dalton principle and have a weak preference for equity.

Legislative bodies and group entities have the tools of social science and statistics under their belt that individuals do not. Consider the case the case of the United States of America, they have the BLS, the CBO, and the FDIC all under their thumb used to calculate the effects of economic policy and look at economic outcomes. Indeed, every decade the Federal government has access to Census data that can be easily analyzed.

Consider another entity where such tools are readily available: central banks. Each central bank has tools to create forecasts and model economic outcomes. Complicated DSGE models that use differential equations come to mind. Indeed decades of work in macroeconomics have helped policymakers smoothen decisions and predict outcomes. If such models are of no further help, banks can turn to market-based tools, such as the TIPS spread and futures.

Looking outside of macroeconomics, basic neoclassical microeconomic theory is easily accessible to any freshman college student who knows a little more than calculus. With such basic knowledge, one can accurately predict the effects of rent control or a tax cut. If one would want more empirical underpinnings, basic linear regressions can be done.

With simple languages such as Python, R, and Stata easily accessible to those with an internet connection, nearly anyone in the first world can learn the basics of Gauss-Markov and OLS and start replicating papers with the mountains of public data easily accessible.

Moreso, this allows governments and NGOs to help decide which intervention is better. Tradeoffs between gun and butter, Malaria nets and de-worming efforts, and cash and in-kind transfers are made easier with the efficiency of bureaucracy.

With group consensus, formal training, and the collapse of egos, such bodies of organization can help decide what is better for me and you. There of course exists principle-agent problems, problems of economic calculation, lack of information, and government failures, but a more libertarian framework allows such problems to be at ease. And indeed it is this group framework that allows more optimal allocations to be done that no single individual can ever hope to calculate.

Against Individual Calculation

Let’s assume one were to abide by perfect utilitarian ethics, without flaw. It seems rational to use such utilitarian rules in one’s own life, by trying to maximize one’s expected utility, this of course implies the following of the four von Neumann–Morgenstern axioms of rational choice.

But such a decision procedure used every day is hard. One would have to rank all preferred outcomes and simultaneously list out probabilities for preference all the while coming up with Bayesian calculations on the spot.

Imagine doing this behind the veil of ignorance where one has to consider all social outcomes. Doing so on the regular would constrain even the greatest of minds, not limited to von Neumann himself.

Focusing on a specific decision procedure can create akrasia and weakens one’s convictions ultimately leading to a less consequentialist lifestyle than initially envisioned.

Even if one can come up with perfect utilitarian calculations, who’s to say that it would be right or moral? Imagine a scenario where such thinking goes against, say basic deontological principles, and prescribes to use others as a mere means. Which decision should be chosen?

Let’s take some things for granted: deontological rules and Aristotlean virtues serve as good heuristics of morality and are easier to follow than consequentialist reasoning.

If one were to preserve utilitarian goals, rule utilitarian logic serves often as antithetical "common sense" ethical reasoning, involves less calculation, and includes greater evaluation of consequences by looking through an aggregate lens, where analysis is more accessible compared to act utilitarianism.

Let’s look at a specific example where simple utilitarian thinking can lead to less ethical outcomes. Imagine John, a STEM graduate who when making consumption decisions, has to evaluate unnecessary goods against donations to the Against Malaria Foundation. John may think that this leads towards more preferable outcomes, but such thinking leads to everyday complexity when there exists no need.

Sacrificing consumption for charitable donations often leads to reduced levels of well-being, which then leads to reduced output. Indeed depression in early adulthood can drastically reduce one’s lifetime wages.

If such facts were to be considered, one may find that donations have ended up less than what they could have been. Instead, it's simpler to set a minimum desired amount of consumption and savings and then donate to charity rather than think of tradeoffs during every decision.

Worse, one can find oneself as the “next SBF”, and ultimately create less trust in the ethical system that brought one to naively commit to such choices in the first place.

One can still subscribe to utilitarian goals for public policy and believe in the moral obligations brought by famous works such as Singer (1972), but one does not need to subscribe to the belief that one ought to perform utilitarian calculation, for what procedure theoretically maximizes the good is not sufficient for an action that is good enough.